Investment Proposal for Establishment of Kindergarten and Basic Primary

School

PROJECT PROPOSAL FOR ESTABLISHMENT

OF KINDERGARTEN SCHOOL

New Paradigm Academy Plc

PROJECT TO BE IMPLEMENTED IN: -

ADDIS ABABA ETHIOPIA,

LEMI KURA SUB CITY WOREDA 08

PROMOTERS: .

April, 2025

Addis Ababa, ETHIOPIA

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Contents
1. INTRODUCTION..........................................................................................5
1.1. BACKGROUND......................................................................................5
1.2. PROJECT JUSTIFICATION.......................................................................6
2. THE PROJECT.............................................................................................7
2.1. THE PROJECT AREA..............................................................................7
2.1.1. TOPOGRAPHY.................................................................................7
3. ECONOMIC ACTIVITY..................................................................................7
4. SERVICE DESCRIPTION..............................................................................9
5. OBJECTIVES.............................................................................................10
5.1. GENARAL OBJECTIVE..........................................................................10
5.2. SPECIFIC OBJECTIVES.........................................................................10
6. MISSION, VISION AND VALUES.................................................................11
6.1. MISSION:............................................................................................11
6.2. VISION:...............................................................................................11
6.3. VALUE:...............................................................................................11
7. ECONOMIC & SOCIAL BENEFIT AND JUSTIFICATION.................................11
8. MARKET STUDY........................................................................................12
8.1. SUPPLY AND DEMAND OF BASIC PRIMARY SCHOOL...........................12
8.2. SUPPLY AND DEMAND OF KINDERGARTEN.........................................18
9. ORGANIZATION AND MANAGEMENT........................................................25
9.1. ORGANIZATION STRUCTURE..............................................................25
9.2. TRAINING REQUIREMENT...................................................................26
10. SERVICE CAPACITY AND PROGRAM.......................................................28
10.1. CAPACITY.........................................................................................28
10.2. SERVICE PROGRAM.........................................................................29
11. FINANCIAL STUDY..................................................................................31
11.1. FIXED INVESTMENT.........................................................................31
11.2. WORKING CAPITAL..........................................................................38
11.3. SOURCE OF FINANCE.......................................................................40

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11.4. BANK LOAN REPAYMENT.................................................................41
11.5. UNDERLYING ASSUMPTIONS...........................................................41
11.6. REVENUE PROJECTION.....................................................................42
11.7. FINANCIAL VIABILITY.......................................................................44
11.7.1. INCOME STATEMENT..................................................................44
11.7.2. PAYBACK PERIOD.......................................................................46
11.7.3. INTERNAL RATE OF RETURN......................................................46
11.7.4. NET PRESENT VALUE.................................................................46
12. ENVIRONMENTAL IMPACT ASSESSMENT...............................................47
13. ACTION PLAN.........................................................................................48

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EXCUTIVE SUMMARY
1) Project New Paradigm Academy Plc
promoter
2) Project Type KG School Business Proposal
3) Project
Promoter
3 Nationality Ethiopian
4) Project Addis Ababa
Location
5) Premises 500m2
Required
6) Service The project is expected to thought about 125
Capacity students during its operation.
7) Startup Capital
The total of birr 20,000,000.00 startup
capital is required. From this 30% (Birr
6,,000.00) will be covered by the promoter,
while the rest 70% (Birr 14,000.00) will be
covered by Shareholders .
8) Employment
Opportunity The total job opportunity created by the
project will be 20.
9) Benefits
expected  Providing quality educational service
 Stimulating the local economy by adding
value to the sector of the economy.
 It is a source of revenue for government.
 Creating employment opportunity.
 Transferring technology.

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1. INTRODUCTION

1.1. BACKGROUND
Ethiopia is currently on the edge of rapid economic development with
consistent double-digit growth over the last successive years. The
trend in sustainability of economic growth is being witnessed in all the
critical areas of consumption indicators such as; social sectors, power,
energy, construction, manufacturing and others.

Education, as a very important factor to human development, is of a

high priority in the overall development endeavor of the government.
One of the aims of education is to strengthen the individuals and
society’s problem-solving capacity, ability and culture starting from
basic education to all levels with an aim of universal Elementary
education by 2023/2024.

Due attention is also given to provision and appropriate usage of

educational facility, technology materials, environment, organization
and management so as to strengthen the teaching-learning process
and expansion of education. Inadequate facilities, insufficient training
of teachers, overcrowded classes, shortage of books and other
teaching materials, are all problems of the kinder garden school which
are indicators of the low quality of education. Thus, it requires the
concentrated effort of all parties’ government, non-governmental
organizations and communities in supporting increased access to
equitable and quality of education.

There are significant educational challenges in Ethiopia. Although

efforts have tried to universalize access to kinder garden education,
current national figures demonstrate that only 60% of children are
enrolled, with a teacher-student ratio of 1 to 72. Improving educational

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quality is a major goal which could depend on the pedagogical
approach and curriculum structure. There is also a widespread lack of
access to resources (including textbooks and extra-curricular learning
materials).

1.2. PROJECT JUSTIFICATION

Education is the best investment for the people because well educated
people have more opportunities to get a job which gives them
satisfaction. Educated individuals enjoy respect among their colleagues
and they can effectively contribute to the development of their country
and society by inventing new devices and discoveries. Good People
sacrifices their time and money and sometimes even their health to
raise educational level because they realize that education is their
passport to the future and for tomorrow.

Therefore, this project proposal is prepared to fill the gap seen in this
city by building Kindergarten School that will contain 7 class rooms and
other blocks will be used for the purpose of office, class, pedagogy
center, library, and toilet.

2. THE PROJECT

2.1. THE PROJECT AREA

The project is thought to be planted in Addis Ababa City Administration

Lemi Kura Sub City. The Sub city has an estimated total area of 50-70
km2.

2.1.1. TOPOGRAPHY

The project location Addis Ababa City Administration is situated in the

mid land areas of in an altitude ranging 2,326 fit.
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3. ECONOMIC ACTIVITY

Population of the city is mostly engaged in various business activities.

Experience shows, various investments undertaken have been
attracted to the area to utilize the available demand potential for
education.

The major activities of the project will be;

 To own the required plots at fair lease cost to support education.
 To build/re construction/ structures like classrooms, workshops,
libraries, offices, laboratories, play grounds, etc.
 To enhance the school and institute up to high school level
 To offer students with complete life changing skills
 To provide opportunities to them to become self-supporting members
of the society and to make students to become society builders
 To maintain norms and values of the society in the school and among
the students
 Arrange tutorial sessions to children who are performing less in their
academic status to help them improve
 Help students to acquire different vocational skills as per their interest
so that they will be self- supportive and productive
 Monitor and follow up academic status of children/students and take
corrective actions to help them improve their performance.
 To create genuine and creative minded generation
 To introduce modern teaching and learning
 To teach children in their mother tongue
 To maintain the diversity of Ethiopian nations and nationalities in the
school as it is in the real Ethiopia.

To exhaust a benefit that a country should get from youngsters at their

school age through different competitive stages and creativity researcher

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 Available demand potential for educational institution which is
because of the existence of large population of school age around
the city.
 High economic growth and investment activities in the city and
surrounding area
 Large population of the city and the surrounding area which is
the potential market for the envisioned project.
 Location importance of the project area to the central part of the
targeted cites.
 It is among well infrastructure area of the Cites. For example; the
main asphalted road which has been serving to connect to East
and western parts of the business area passes the selected
project area.
 Conducive investment packages of the Government.
 Abundant and diversified labor force.

4. SERVICE DESCRIPTION

According to the new structure of Ethiopian education system, primary

education lasts for eight years (age group 6-14) and is divided into two
cycles: basic education (Grades I-IV) and general education (Grades V-
VIII). Junior secondary schools no longer exist, as Grades VII and VIII
have become the two upper classes of the second cycle of primary
education. Secondary education is divided into two cycles: the first
(Grades IX and X) or general secondary education, and the second
cycle (Grades XI and XII) or preparatory secondary education. Since
the education reform, completion of Grade X leads to the Ethiopian
School Leaving Certificate Examination (ESLCE). It is used to be at the
end of Grade XII. The second cycle prepares students to continue their

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studies at the higher education level or select their profession. It offers
a science option and a social science option. At the end of this cycle,
students take the Ethiopian Higher Education Entrance examination to
enter higher education institutions.

Technical and vocational education and training is institutionally

separate from the regular education system and runs in parallel with it.

The project is planned to establish Kindergarten. The project will have

a wide range social service provision as it comprises modern
educational services.

The project will start it’s activates by simple clearing the land,
undertaking construction activities (in addition to the existing
building), furniture and equipment and hiring professionals and semi-
skilled employees from local market.

Finally, it will start its operation with providing a service capacity of

60%, 80% and 100% on the 1st, 2nd and 3rd year respectively.

Based on current price charged by private Kindergarten Schools the

recommended price for the envisaged school is Birr 11,000.00 –
12,000.00 per student/term (one term have 2mothe half ).

5. OBJECTIVES

5.1. GENARAL OBJECTIVE

The objective is to construct new Kindergarten and Basic in order to

provide quality educational service and thereby raise the standard of
future education Background and development to primary school
facilities.
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5.2. SPECIFIC OBJECTIVES

 Increasing the Kindergarten and Basic education background

coverage
 Increasing the school facilities in this school
 To employ properly qualified and skilled teachers to teach
 To educate each child as per his/ her unique needs
 To meet national education standards

6. MISSION, VISION AND VALUES

6.1. MISSION:

For instance, institutions like the New Paradigm Academy emphasize

their commitment to providing high-quality care and education
regardless of a child's background or circumstances. Similarly, the
International Community School (ICS) focuses on nurturing talents and
character while empowering learners and providing quality education
to all children in Private Sector.

6.2. VISION:

The vision of New Paradigm Academy typically revolves around

creating a future where children are well-prepared for lifelong learning.
This includes not only academic readiness but also social-emotional
development. Schools envision themselves as centers of excellence
that contribute positively to the community by shaping responsible
citizens who can thrive both locally and globally.

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6.3. VALUE:

• Providing quality education,

• Honesty and accountability,
• Effectiveness and efficiency in resource utilization,
• Working by good Partnership with stakeholders,
• Commitment and innovativeness,
• Gender sensitiveness,
• Impartiality, legality,
• Respect for the people and continuous learning

7. ECONOMIC & SOCIAL BENEFIT AND JUSTIFICATION

In general, the envisaged project promotes the socio-economic goals

and objectives stated in the strategic plan of the Addis Ababa City
Administration. These benefits are listed as follows.

A. Profit Generation

The project is found to be financially viable and earns an average profit

of about Birr 560,038.86 per year within the project life. Such result
induces the project promoter to reinvest the profit which, therefore,
increases the investment magnitude in the City.

B. Revenue

In the project life under consideration, the region will collect from
corporate tax payment and income tax. It will add income for the
Federal and Administration Cities that will be used in expanding social
and other basic services in the Cites.

C. Employment Opportunity

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The proposed project is expected to create employment opportunity to
34 citizens.

8. MARKET STUDY

8.1. SUPPLY AND DEMAND OF KINDERGARTEN

As putted on the Ethiopian constitutions all citizens have equal right to
learn, but the previous government policy and poverty that deep
rooted in the country challenged the implementation and left out many
children’ from school. The Millennium Development Goal of Ethiopia,
goal 2 is to achieve universal primary education. Target 2.A: ensure
that, by 2020, children everywhere, boys and girls alike, will be able to
complete a full course of primary schooling as the sub-Saharan Africa
and Southern Asia are home to the vast majority of children out of
school.
Current education service providers in the city are many and varied
including government, private sector, local communities, foreign
communities, Non-Governmental Organizations (NOGs), churches,
mosques, and missionaries. There were 8 Kindergarten school facilities
in the city operated by these providers in 2023/2024.

As can be seen from the table 2 the private sector is the dominant
sector in the ownership of kindergarten schools in the City owning and
operating by Government 50% of the number of education facilities in
the city at kindergarten level. Next to the private sector is communities
owning and operating 29% and missionaries 9%. The role of the NGO is
extremely limited owning only 4.5% of the school facilities in the city. It
should be noted also that there are the following table seen
kindergarten schools operated by foreign communities and mosques.

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Table 02: Number of Kindergarten Education Facilities in Addis Ababa City
Government by Types of Ownership (2023/2024)

Ownership Type Number of

Schools

KG % Share

Government 112 50%

Public(Communities)

Private 65 29%

Missionary 20 9%

NGO 10 4.5%

Church 8 3.6%

Mosque 2 0.9%

Foreign community 5 2.25%

Total 222 100%

Source: Education Statistics Annual Abstract 2023/2024

The basic reasons the private sector is dominating in KG are that:

• The government’s policy that focuses on providing basic
education to all and accordingly the government is less investing
in KG,

• Traditionally in the City and in the country as a whole KG is the

domain of the private sector, and

• Compared with primary and secondary schools, investment

required in KG is small, which attracts the private investors with
weak financial capacity.

4). this is the demand gap.

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Table 04: Number of Children with No Access to Education and Number of
School Sections and Teachers Required (2023/2024)

Level of Education Number of Children Additional Additional

Numbe Number Number

Number Number
r
Enrolled with No of of

Eligible
Access Sections Teachers

Required Required
1

Kindergarten 176,95 26,539 130,415 1,326 1,326

4
Source: Education Statistics Annual Abstract 2023/2024, Addis Ababa city
Education Bureau.

Based on the standards of the Ministry of Education with respect to

section to student and teacher student ratio it is estimated that 1,326
additional school sections and 1,326 additional teachers at
kindergarten are required to accommodate the needs of those children
who currently have no access for education.
This does not mean however that the needs of these children would be
addressed through commercial service provision since most of the
children are from poor families who would not be able to afford to pay
school fees and cover other educational expenses for their children. On
the other hand, it is believed that commercial service providers can
also accommodate the partial needs of these children through
innovative service provision.
Based on the standard parameters acquired from the Addis Ababa
City’s Education, it can be concluded that there is a supply gap in
education service facilities supply in the City to provide education at
1

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acceptable level of standard. The supply gap/shortfall is calculated and
given under Table 3.4. The analyses indicate that the supply of
education facility at kindergarten level is short of the demand by 5.2%.
In other words, the city needs additional KG schools that may have 80
sections to achieve the required education quality standard.

Table 05: Supply Gap in Kindergarten Education Facilities in Addis

Level of Number of School Supply Shortfall

education Sections

At Present Required In In %

Based on Numbe
the r

Standard

KG 1,471 1,551 80 5.2

Source: Calculated Based on Data Acquired from Ministry of Education and
Bishoftu city , Bureau of Education.

The demand level for schools from KG to primary level for the coming
ten years is estimated based the standard established by the Ministry
of Education and the City population growth rate. The result is
summarized under table below.
Table 06: Projected Demand for Kindergarten Education facilities in Addis
for the coming ten Years

Year Demand for School

Section in Number

2024/2025 1,596

2025/2026 1,642

2026/2027 1,690

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2027/2028 1,739

2028/2029 1,789

2029/2030 1,841

2030/2031 1,894

2031/2032 1,949

2032/2033 2,006

2033/2034 2,064

2034/2035 2,124

2035/2036 2,186
Source: Calculated Based on Data Acquired from Ministry of Education and
Addis Ababa Education.

As can be referred from table above, the demand for kindergarten

school section will reach 2,186 after ten years. This is a very
conservative estimate given the number of children with no access to
school as well as the planned annual economic growth rate of 10%.
With economic growth and improved in standard of living of the city
dwellers the proportion of families who can afford to send their
children to a kindergarten will increase which will likely cause an
increase in demand for kindergarten school.

8 ORGANIZATION AND MANAGEMENT

8.2. ORGANIZATION STRUCTURE

The project will be managed by a qualified and experienced manpower
to make it successfully perform its purpose.
The total manpower requirement, including skilled and unskilled labor
is 20 persons. The corresponding total labor cost, including fringe
benefits, is estimate at Birr 71,50.00.
Table below shows the list of manpower required and the estimated
annual labor costs.

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8.3. TRAINING REQUIREMENT

Technical staffs should be given 15 to 20 days training. The cost of
training is estimated at Birr 10,000.00.
The organizational setup of the project will be as follows.

8. SERVICE CAPACITY AND PROGRAM

8.4. CAPACITY
Taking in to account the market study on existing condition of
Kindergarten and Basic Primary School education related with the
number of enrolment and eligibility and economic level of service
provision, the envisaged school will have total 6 sections as shown on
the table below.
Table 08: Capacity of Kindergarten and Primary School [Sections]
S. No. Level of Education Number of Sections

1. Kindergarten 6
Total 6

Table 10: The level of education, the number of sections, grades and
the corresponding maximum number of students in each secti
S. Level of Year Number Number of Total
No. Education of Students Per class Number
Section of
Students
1. Kindergarten 2018 6 40 240-250
2. Kindergarten 2019 7 40 250-280

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3. Kindergarten 2020 8 40 280-300

FINANCIAL STUDY
The total initial investment capital of the project is estimated to be
about Birr 9,734,801.04, which are constituted of fixed investment
cost Birr 9,734,801.04 and initial working capital Birr 660,198.96.
Table 10: School Fee Forecast for the Three Years.
N Description 2018 2019 2020
o
1 No Of Students 250 280 300
1 Registration Fee 1800.00 1800.00 2500.00
2 Quarterly Fee 18,000.00 18,000.00 25,000.00

8.5. FIXED INVESTMENT

Fixed investment costs are expenditures on the required fixed asset.
The major components of fixed cost are constituted of expenditures on
construction of civil works. The rest will go to furniture & equipment
and the acquisition of office facilities. According to estimated made by
this project the total fixed cost will be birr 1,000,000

EQUIPMENT AND TOOLS

The list of tools and equipment and other facilities required for
provision of Kindergarten and Basic Primary education service is given
in below. The estimated cost is Birr 620,000.00 which is totally
required in local currency.

Table 15: Equipment and Tools and Cost

S. Description Unit of Quanti Unit Cost Total Cost

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Measure
No. ment ty (Birr) (Birr)
1. Desk top computers Set 2 40,000.00 80,000.00
2. Lap top computers Set 2 30,000.00 60,000.00
3. Photo copy machine Piece 1 100,000.00 100,000.00
4. Printer Set 1 40,000.00 40,000.00
5. Satellite TV-set Set 1 40,000.00 40,000.00
Other miscellaneous
6. items 300,000.00 300,000.00
Grand Total 620,000.00

FURNITURE
The list of office furniture and other facilities required for provision of
Kindergarten and Basic Primary education service is given in below.
The estimated cost is Birr 1,926,000 which is totally required in local
currency.

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Table 16: Furniture & Costs

Qua Total Cost

S. No. Description ntity Unit Price (Birr)
1. Managerial Table 1 30,000 30,000.00
2. Managerial Swivel Chair 1 25,000.00 25,000.00
3. Guest Chair with Arm-rest 6 18,000.00 108,000.00
4. Coffee Table 60x60cm 2 7000.00 14,000.00
5. Secretary Table 2 8500.00 17,000.00
6. Guest Chair 4 6000.00 24,000.00
7. Side Table 2 8000.00 16,000.00
8. Room Desk 300 6000.00 1,800,000
1,926,000.0
Grand Total 0

Table 18: Manpower Requirement

Require
S. d Monthly Annual Salary
No. Description Number Salary (Birr) (Birr)
1) Director 1 25,000.00 25,000.00
2) Senior Secretary 1 7,500.00 7,500.00
3) Registrar- Accountant 2 12,000.00 24,000.00
4) Computer Administrator 1 13,000.00 13,000.00
5) Teachers 8 10,000.00 80,000.00
6) Assistance teachers 8 7,000,000 56,000.00
7) Librarian 1 11,300.00 11,300.00
8) Cleaner 4 5,000.00 5,000.00
9) Guard 2 6,000.00 12,000.00

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10) Gardener 1 7,000.00 7,000.00
11) Secretary 1 10,000.00 10,000.00
Grand Total 30 250,800.00

8.6. WORKING CAPITAL

Working capital is part of annual operating cost and is required to
make the project operational. Additionally for some operational costs
whose yearly expense were taken as they are some limited months
expenses were taken as forecast the working capital requirement of
the project. According to the forecast made in detail the amount of
initial working capital is estimated to be Birr 9,131,800

Table 19_: Summary of Working Capital

S. No. Description Cost (Birr)/year

School Compound Rent one year’s
1 half 8,100,000
2 Furniture and Office Equipment 1,926,000.00
3 Salary & Wage Expense 250,800.00
4 Office Maintenance, fence and landing 800,000.00
5 Repair and Maintenance 50,000.00
6 Administrative Expenses 150,000.00
7 Utilities 25,000.00
8 Miscellaneous Expenses 80,000.00
Total 9,131,800

8.7. SOURCE OF FINANCE

The total of birr 9,131,800 startup capital is required. From this full
will be covered by the investors.

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8.8. REVENUE PROJECTION

The project generates revenue from the service provision for the
ultimate consumers without imposing higher price.

Accordingly, the project owner expects to earn from this business

activity total revenue of Birr 18,000,000 during its operation.
Ter
Unit of m/
S. Descriptio Annual Revenue(Birr)/Year
Measure yea
No. n r/
ment
Y1 Y2 Y3
Number of
Kindergarte Student/ye 25 18,000,000. 28 20,160,00 30 30,000,00
1. n ar 4 0 00 0 0 0 0
Total 4,200,000.00 4,920,000.00 5,640,000.00

Table 21: Revenue Projection

8.9. FINANCIAL VIABILITY

As it is a private (PLC) firm established with the primary objectives of

generating profit and providing social service, the project should be
financially viable for the promoter and the lending institution. To this
end, some financial statements were selected to compare project costs
and benefits throughout the project life. Income statement and cash
flow analysis are selected for this study as financial measures.

8.9.1. INCOME STATEMENT

Project Years
Description Y1 Y2 Y3
Gross sales 4,200,000.00 4,920,000.00 5,640,000.00
Less Operating costs 660,198.96 660,198.96 660,198.96
Profit before depreciation 3,539,801.04 3,539,801.04 3,539,801.04
Less Interest 1,455,300.00 1,309,770.00 1,178,793.00
Profit before tax 2,084,501.04 2,230,031.04 2,361,008.04
Less tax (30%) 625,350.31 669,009.31 708,302.41
Net Income 1,459,150.73 1,561,021.73 1,652,705.63

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Here, project revenue and service costs; operating and service are
listed and compared to see whether the project generate profit or loss.
According to the forecasted income statement tales the project is
found profitable through its life.

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Table 22: Forecast of Profit/or Loss (Birr)

Table6:-Project Cash Flow For To Coming Five Years

Year
Description
1 2 3 4 5
Cash In Flow
Beginning Cash - 21,290,229. 24,818,362 31,502,511.
Balance 20,376,951
35 .51 94
Revenue 45,000,000 54,000,000 64,800,000. 77,760,000 93,312,000.
.00 .00 00 .00 00
Bank Finance 21,600,000
.00
Total Cash in Flow 66,600,000 72,529,036 83,376,979. 98,979,701 116,286,690
.00 .00 30 .41 .66
Cash Out Flow
Cost of Sales 27,000,000 32,400,000 38,880,000. 46,656,000. 55,987,200.
.00 .00 00 00 00
Administration 7,650,000. 8,415,000. 9,256,500.0 10,182,150. 11,200,365.
Expense 00 00 0 00 00
Loan Repayment 6,166,349. 6,166,349. 6,166,349.8 6,166,349.8 6,166,349.8
88 88 8 8 8
Bank Profit Markup 2,772,613. 2,320,956. 1,776,603.0 1,179,543.3
79 82 1 7 340,719.68
Provision for Tax 2,634,085. 3,784,415. 5,192,413.9 6,891,807.3 9,006,300.3
17 11 5 2 6
Total Cash out Flow 46,223,049 53,086,722 61,271,867 71,075,851 82,700,935
Annual Cash in Flow 21,290,229 24,818,362. 31,502,511. 42,113,577.
20,376,951 .35 51 94 02

8.9.2. PAYBACK PERIOD

The payback period, also called pay – off period, is defined as the
period required recovering the original investment outlay through the

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accumulated net cash flows earned by the project. Accordingly, based
on the projected cash flow it is estimated that the project’s initial
investment will be fully recovered within 5th year.

8.9.3. INTERNAL RATE OF RETURN

Net present value (NPV) is defined as the total present (discounted)

value of a time series of cash flows. NPV aggregates cash flows that
occur during different periods of time during the life of a project in to a
common measuring unit i.e. present value. It is a standard method for
using the time value of money to appraise long-term projects. NPV is
an indicator of how much value an investment or project adds to the
capital invested. In principal, a project is accepted if the NPV is non-
negative.

Accordingly, the net present value of the project at 5.50% discount

rate, which is acceptable.

It is a ratio of net profit and interest to total capital invested for a

single year at full capacity utilization. Thus, the simple rate of return of
the project is about 15.40%.

8.9.4. NET PRESENT VALUE

The internal rate of return (IRR) is the annualized effective

compounded return rate that can be earned on the invested capital,
i.e., the yield on the investment. Put another way, the internal rate of
return for an investment is the discount rate that makes the net
present value of the investment's income stream total to zero. It is an
indicator of the efficiency or quality of an investment. A project is a
good investment proposition if its IRR is greater than the rate of return
that could be earned by alternate investments or putting the money

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70-21 in a bank account. Accordingly, the IRR of this project is
computed to be 16.65 % indicating the viability of the project.

Base on the cash fallow statement, the project is anticipated to have a

net present value of Birr 907 thousand when discounted at 12.00%
discounting factor where as its IRR is 17.60%.

9. ACTION PLAN

Table 23: Time Schedule

S. Activities Time Frame

No.
2021/2022 2022

Augu Se Oc No De Ja Feb Ma Ap
st p. t. v. c. n. . r. r.
1. Preliminary Tasks

2. Building and Construction

3. Procurement of Tools, Materials

and Equipment
4. Starting Operation

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